Omitted GST rates & HSN code (7012) – what you should know

The calculation of the actual amount of tax payable under GST is based on two factors. Firstly, the rate of tax and secondly, the value of supply. The rate of tax multiplied by the value of supply, dividends by 100, is the amount of the tax payable under the GST, of course, subject to compensation cess, if applicable. For computing the amount of tax under GST, the following steps are required to be taken:

Step 1: Find HSN code, custom tariff and services (SAC):

Find the HSN code for goods as given in the commodity index and locate the applicable GST rates from the seven schedules of notification no.1/2017-C.T dated 28/06/2017, see part 2 of this tariff. Similarly, for finding service codes for the supply of services, see the list of service codes given in part 3 of this tariff.

Step 2: Determine the applicability of CGST/SGST/UTGST/IGST:

Find the HSN code for goods as given in the community index and locate the applicable GST rates from the seven schedules of notification codes for the supply of services. See the list of service codes given in part 3 of this tariff.

In addition, compensation cess for certain sin/luxury goods has to be paid. In the case of intra-state supplies, the GST is shared 50:50 between the Centre and the satate/Uunion territory; therefore, an equal amount of tax is payable to the Centre and the State/UT.

Step 3: Determine whether your supply falls under the threshold exemption or piece rate scheme:

If in the event, your supply of goods is covered under the melding no. 2/2017 ct. Exemption from CGST has been granted as per the plan. Rate), dated 28-6-2017 or your supply of services is exempt from CGST in accordance with Notification No. 12/2017-C.T., dated 28-6-2017 (see Part 3 of this tariff), you are also exempted from SGST, UTGST and IGST as similar notifications have been issued by the concerned authorities. Then, if your annual turnover is less than `20 lakh/40 lakh, you can opt for a limit exemption.

‍Threshold exemption: There is a threshold limit of 40 lakhs/20 lakhs/ 10 lakhs, as the case may be, below which GST on supply of goods or services or both is neither payable nor any registration is required. Compositions scheme: if you are working under the compositions scheme for intra state supply of goods, you have to raise a bill of supply.

This scheme is also applicable to restaurant services not supplying alcoholic liquor, where the rate of composition levy is 2% SGST. Composition scheme for intra-state suppliers of services (or mixed suppliers) with a Tax Rate of 6% (3% CGST + 3% SGST) having an annual turnover in the preceding Financial Year up to ` 50 lakhs. This scheme does not apply to inter-state supplies.

Step 4: Rates of GST and compensation cess for intra state or inter-state supply of goods and services:

Based on the HSN code and services code, the actual rate at which GST is payable may be worked out, for different types of transactions, in the following manner:

HSN Code	Description
70	Glass and glassware
7001	CULLET AND OTHER WASTE AND SCRAP OF GLASS, EXCLUDING GLASS FROM CATHODE RAY TUBES OR OTHER ACTIVATED GLASS OF HEADING 8549; GLASS IN THE MASS
70010090	CULLET AND OTHER WASTE AND SCRAP OF GLASS; GLASS IN THE MASS - CULLET AND OTHER WASTE AND SCRAP OF GLASS; GLASS IN THE MASS: OTHER
7002	GLASS IN BALLS (OTHER THAN MICROSPHERES OF HEADING 7018), RODS OR TUBES, UNWORKED
700210	GLASS AND GLASSWARE~Glass in balls (other than microspheres of heading 7018), rods or tubes, unworked~Balls

Services accounting code (SAC) in GST

Like goods, services are also classified uniformly for recognition, measurement and taxation. Codes for services are called services accounting code or SAC.

‍For examples:

Legal documents and certification services concerning patents, copyrights and other intellectual property rights-998213.

The first two digits are the same for all services i.e. 99

The next two digits (82) represent the major nature of service, in this case, legal services

The last two digits (13) represent the detailed nature of the service, i.e., legal documentation for patents, etc.

NIL rated or exempted supplies: While negative and zero rated supplies are those which are mentioned in statute, NIL rated supplies are council has recommended no tax or 0% tax and are covered under a notification issued by the government in this regard. No credit of input/input services would be available for these items. Further, a person exclusively engaged in the supply of these items is also not required to register. Basically, these are essential goods/services of daily use/need required by a layman. A list of these items is given in this tariff in Part 3.

‍Suggested Read: GST Rates and HSN Code 7223 You Should Know

FAQs

What is the difference between HSN code and sac code?

HSN code is used for classification of goods, while sac code is used for services.

What is the full form of HSN?

HSN code stands for harmonised system of nomenclature, a ssem for classifying goods worldwide.

What is gross turnover under GST?

“Total turnover” under GST means the total amount of taxable supplies (excluding the value of input supplies on which GST is payable under reverse charge basis) of a person, exempt supplies, exports of goods and services, and inter-state supplies of a person, all having the same PAN. It is to be calculated on all India basis and does not include CGST, SGST, UTGST, IGST, and Cess.

Where is mention of the HSN code required?

HSN code is required to be mentioned in the invoice or supplies and GSTR-1 return.

Is HSN code 4 digits or 8 Digits?

HSN codes are usually 6-digit codes. However, in India we have an 8-digit HSN code where the first two digits represent the chapter number, the next two digits represent the title number, the following two digits represent the subtitle, and the last two digits represent the tariff item.

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